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German inflation overshoots ECB target in May

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German inflation overshoots ECB target in May
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BERLIN (Reuters) – German consumer price inflation soared more than expected in May to hit the highest level in over a year, data showed on Wednesday, surpassing the European Central Bank’s rate target of just under 2 percent for the euro zone as a whole.

German consumer prices, harmonised to make them comparable with inflation data from other European Union countries, rose by 2.2 percent year-on-year after an increase of 1.4 percent in the previous month, the Federal Statistics Office said.

This was the fastest pace since February 2017 and beat a Reuters consensus forecast for a rise of 1.8 percent.

On the month, EU-harmonised prices were up 0.6 percent, the preliminary numbers showed. That compared with the Reuters consensus forecast for an increase of 0.3 percent.

The stronger-than-expected inflation figures are likely to play into the hands of policy hawks, including Bundesbank head Jens Weidmann, who want the ECB to end its asset purchases this year and see room for a rate hike towards the middle of 2019.

(Reporting by Michael Nienaber; Editing by Maria Sheahan)

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